27th Oct ’23 — A Day to Rest & Reload — PostMortem on Nifty & BankNifty
Nifty Analysis
Recap from yesterday: “For tomorrow, I wish to maintain my bearish stance and expect Nifty to trade between 18880 and 18762. If we break 18762, my next target would be 18597.”
Nifty took a breather today, opened gap up around the 18930 area and rose steadily. We did not retouch or break the low of 25 Oct ie 19075 zone, slightly indicating that the bottom may not be in place. Since my bearish view went into loss today, I had to square it off. My current view is neutral and would like to go bearish if the swing low of 18837 is broken again. The moment Nifty climbs back above 19170, I wish to go long.
Usually in periods of aggressive directional moves, strong indices usually take a breather to regain the strength. I wish to see it that way for the time being. The price actions of Monday and Tuesday will give us more clarity and we will be able to deploy better strategies then.
A simple Fibonacci level places the 23.6% retracement level at 19083 and 38.2% at 19227. Ideally, the bearish trend could still be intact until 19227 but the problem is that we cannot predict with certainty if that would come in this weekly series or not. For Monday, I wish to go with a neutral stance and choose the direction based on how markets move in the forenoon session. Personally, I prefer the markets to go lower as the rising VIX would lift the options premium.
BankNifty Analysis
During periods of trend reversals, BankNifty will act as the leading indicator. I hope that will work out in this period as well. Today’s price action is quite too early to say if we have reversed the bearish trend — because it was mostly support and resistance play.
BN started around the 42576 zone and held its ground confirming the lack of momentum of the bears (as of now). It could also be a day of rest as we had strong price moves already this week. BN was unable to climb back upto the resistance zone of 43012 — indicating lower strength of the bulls as well.
Till we get clarity if its a reversal or trend continuation, I wish to change my stance to neutral from bearish. The resistance points above the spot are 43012 and 43253. The support zones are 42576 & 41624. Yesterday we discussed the importance of 41624, since it comes at a drop of 1158 points — the bears have to really exert that much pressure. This reassures the decision to take some rest and build up the momentum for the next move.